A version of this article first appeared in Customer strategy, a magazine published 10 times a year in London by TBC Research.Through its comprehensive portfolio of magazines, events and research, TBC Research is dedicated to helping senior business professionals make more informed technology decisions.

In a much-trumpeted launch last month, Israeli voice recording vendor Nice Systems made a great play of its new technology platform and strategy for call centres which it called customer experience management (CEM). "It represents the next step beyond CRM," the vendor bellowed. Put simply, the technology lets a company record conversations between call centre agents and customers, which is then analysed in order to improve communications with customers.

With the excitement of an archaeologist who has just discovered Atlantis, a Nice executive raved about an aspect of the technology called executive connect, which allows a busy executive to listen into call centres from anywhere and "break the walls between the contact centre and the boardroom."

Nice typifies the multitude of vendors swooping on the European call centre market with a voraciousness not seen since the wave of excitement over sales force automation. All manner of technologies are surfacing to improve call centre operations, from software which recognises the value of incoming calls by their telephone number, to network infrastructure technologies looking to gut old infrastructures and replace them with big fat pipes that can carry any amount and type of data.

But there are many barriers to successful implementation of a multi-channel service strategy, not least the difficulty of persuading customers not to pick up the phone but to use one of the other channels which are much cheaper for the vendor to support.

Call Centres of the FutureThe driver for this frenzied activity is the much-promulgated assertion by vendors and analysts alike that the call centres of the not-too-distant future will become Web-enabled, multimedia, brand experience company portals. Here call centre agents will not merely soothe anxious customers' furrowed brows but will also smoothly and reassuringly cross-sell and up-sell a range of indispensable products and services. This will be achieved, claim the pundits, by ensuring that the ever-increasing number of channels available to the customer--e-mail, interactive Web response, Web self service, Internet telephony (VoIP), video over Internet and WAP--are seamlessly integrated at the call centre and linked to the back office so every company contact is recorded, and the preferences of customers not only noted but predicted.

It is based on the assumption that the increasingly widespread use of Internet technologies will open up the myriad communication channels over the coming years, especially when digital signals replace analogue, and digital TV allows universal access to the Web. Therefore it follows that emerging new media such as text chat and VoIP (voice over Internet protocol) will become an increasingly popular means of contacting companies through their Websites. Certainly the vendors think so and infrastructure players such as Cisco and Nortel Networks are making significant investments on this premise.

As Rhion Jones of customer services and CRM consultancy Helpdesk Associates says, "The Web offers the potential to achieve the integration of various channels, which is essential if customer service is to be improved. Existing call centres struggle to achieve sustainable customer satisfaction. Poor call traffic forecasting and insensitive implementation of interactive voice response (IVR) have played havoc with customers' perceptions of service, just when expectations have risen to record levels. The challenge is to improve not only service levels, and just as importantly the perceived levels of service, but also to respond to even more intense commercial pressures."

The 99-Percent SolutionWhile the successful integration of channels promises to bring within reach a truly service-orientated CRM holy grail, the reality today is that fewer than 1 percent of European call centres are Web-enabled, according to a survey from market analysts Frost & Sullivan. Those that are tend to be green field sites with no legacy systems to weigh them down, or else in the financial services and telecommunications industries where products are essentially intangible and therefore easier to service and cross-sell. However, Frost & Sullivan predicts that the integration of Web-based channels will grow at a compound annual rate of 64.9 per cent, and that from software sales of close to $19 million last year, their 2006 value will be $603.6 million.

Despite the benefits of the new channels, the phone is expected to remain the supreme communication channel in years to come. A recent survey by Datamonitor reveals that in 2003, 72 per cent of inbound calls will still be over the telephone. "The phone will always be the most important way for people to do business; it is quick and easy and you get an immediate response," says Datamonitor senior analyst Dan Hawkins.

Redefining the Phone The point has obviously not been lost on vendors such as Nice Systems with its CEM and voice recording products. It has also been recognised by Merita, which used to be the Finnish national bank until it radically overhauled its internal processes and launched itself as a pure Internet bank. Now, as well as using a Website, customers can access their accounts over a mobile phone, carrying out transactions such as moving money between accounts, paying for goods and services and applying for increases on credit limits. All that is needed is a single PIN number, which can be used for either the Internet or the mobile. If the phone is stolen, as well as the standard number to dial that cancels transactions, a tracking device is built in which can trace the phone to an area of only 150 square metres, soon to be pared down to a mere two square metres. Finland has a population of 5 million, of whom 3 million bank with Merita, a pleasure for which they pay every time a transaction is carried out using a mobile.

The advanced use of technology is typical of the whole Nordic region, given that vendors often use Scandinavia as a test bed for new technologies. Professor Rheinhold Rapp, one of the first academics to endorse and help define CRM in management circles, points out that the uptake of technology has actually led to a decline in call centres in Scandinavia, and predicts they will eventually become a last port of call used only for service issues that cannot be automated. With Teutonic detachment, he describes existing call centres as "inefficient human portals."

The chasm may be too wide for other European companies to cross in implementing such radically different business models, but the drivers and cost benefits certainly already exist to persuade businesses to consider Web-based integration. If customers meet their needs over the Web, or opt to use text chat, the cost saving compared to using a call centre agent can be significant. Estimates vary as to exact costs but the consensus is that responding to a telephone query costs about $4, compared to a far smaller figure for text chat, with agents able to deal with between three and six at any one time.

E-mail management is also, in theory, a much cheaper way of responding to customer requests. By using auto-suggestion, a call centre agent can be prompted to give a correct answer. And with a technique called auto-response, the software can supposedly interpret the question itself and provide the correct answer. However, this is a much trickier proposition and requires a huge knowledge base from which to respond and absolute clarity about the types of questions that will be asked.

Sitting behind these technologies is a crucial workflow requirement. This is the one aspect of multi-channel implementation that is essential and underpins the ability to successfully adapt business procedures. Putting together the business rules is an enormous task but will determine, for example, whether an agent responds first to an e-mail enquiry or a telephone call.

Cutting through the hype, vendors have been cagey in their development of the technology, and have resorted to a flurry of mergers and acquisitions to strengthen product offerings. This in turn means that systems integrators are still on a steep learning curve and are finding the task of integrating with legacy systems somewhat arduous.

Mistakes are inevitably being made but, with the benefit of early experiences, it is possible to avoid some of the more obvious. Put in place e-mail point solutions that have not been integrated into existing voice systems, for example, and you risk making a farce of the whole idea of customer service. How is a call centre agent supposed to know that the customer has sent an e-mail and what impression does it leave on the customer to know that the e-mail has not been acknowledged?

A common problem has arisen from the distinction that many businesses have drawn between call centre and e-commerce operations. If they use different infrastructure technologies for each, a complex, lengthy and expensive integration process has to be embarked upon when the two need to be drawn together. It is also worth keeping in mind that no one package will do everything, and a best-of-breed approach is needed.

The New Call Centre Employee A more fundamental issue arises over recruitment. The trend towards multi-channel integration undermines the oft-cited view that call centre agents are a form of cheap labour. If the operation is to be up to scratch a "blended agent" approach must be taken, where the operators are trained not only to respond to telephone calls, but also to take part in text chat sessions, guide customers through a Website, respond to e-mails and spot opportunities for cross-selling. To achieve this, an operator needs a complete knowledge of the company as well as familiarity with the technology.

To undertake all this requires a substantial business case, and Jim Beagle of CRM systems reseller Extraprise believes the ability to persuade different customer segments to use appropriate channels is key to any business plan. "The Internet has undermined the ability to segregate customers, and the issue is how do you facilitate different types of communication, different value propositions for different customers?"

He suggests segmenting customers according to their value to the company, using a penalties and rewards scheme to get them to switch channels. An example is the broker who encourages clients to use the Web until they reach a certain value level, at which point they are shifted onto the phone.

"You need to assess your situation honestly and define where you want to be in the future, segment the customer base and see how they are influencing the company's profitability," Beagle suggests. "Then apply three areas: cost savings, cheaper service and revenue enhancement, and ask 'How can I make it a more personalised experience for the customer?' To have a unified view of the customer is not a trivial thing and it should evolve to this point through phased implementations."